Will Foreclosure Affect My Spouse’s Credit?

National Association of Consumer Bankruptcy Attorneys

Will Foreclosure Affect My Spouse’s Credit?

Brian V. Lee

February 3, 2017

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When facing foreclosure, wanting to protect your spouse is a natural instinct. Whether your foreclosure will affect your spouse depends upon whether the mortgage loan was a joint debt. Going through a foreclosure is never easy. But a foreclosure is even more stressful when it affects loved ones, especially a spouse. Love makes you ask yourself the question: Will foreclosure affect my spouse’s credit?

Will foreclosure affect my spouse’s credit if they ARE NOT on the mortgage?

If your husband or wife is not on the mortgage loan, then in most cases, the foreclosure will not affect your spouse’s credit. Your spouse will not have the mortgage debt reported to the credit bureaus, so a foreclosure on that loan will not affect your spouse’s credit score. Only positive or negative items appearing on a credit report affect a credit score.

However, if your spouse is on the title, but not the loan, your spouse’s credit score may be affected. The longer your spouse was title owner, the more likely it is that the credit bureaus will identify the foreclosure on a property owned by your spouse. Foreclosures appear as derogatory items in the Public Records reporting section of a credit report. Foreclosures are public records and are therefore routinely (but not always) picked up and reported by by the credit bureaus.

In addition, the foreclosure will limit your spouse’s access to secured credit post-foreclosure. Once the foreclosure is completed, your spouse will no longer be joint title owner. For that reason, your spouse will not be able to use the property as collateral to secure new credit.

Will foreclosure affect my spouse’s credit if they ARE on the mortgage?

If your spouse is on the mortgage, the foreclosure will affect your spouse’s credit. If you and your spouse are both on the mortgage, then you both owe the mortgage jointly and severally. The bank can collect against both of you separately. A foreclosure, in this case, will dramatically affect your spouse’s credit negatively.

Scenarios like these also happen in situations where real estate was not disposed of in divorce prcoeedings, or where separated spouses occupy different residences.

In short, if both spouses (or former spouses) are on the loan, foreclosure will affect both spouses.

Everyone has an individual credit score

You have your own credit score, linked to your individual Social Security number. Your spouse has a separate credit score. The credit bureaus do not link credit scores of married persons. A change in one score does not automatically affect the other.

If the foreclosure leads to bankruptcy for just one spouse, then the other spouse’s credit may be affected. If you had co-debts, the bankruptcy will discharge your spouse’s debts, but those debts will then accrue to the non-filing spouse alone. This may shift your debt-to-asset ratio and negatively affect your credit. If you have no joint debts with your spouse, then you don’t need to worry about this.

Learn your options

If you or your spouse is facing foreclosure, consider consulting with an experienced D.C., Maryland and Virginia foreclosure defense attorney. You have options. But generally speaking, the sooner you act, the better.